17:43 November 15, 2012ArticleComments Off on Supreme Court sides with ComCom in Vector stoush

Article – BusinessDesk

Nov 15 (BusinessDesk) – Auckland electricity and gas network owner Vector has lost its final appeal against the way the Commerce Commission set starting prices for the new regime regulating prices for its monopoly services.

Supreme Court sides with ComCom in Vector stoush

Nov 15 (BusinessDesk) – Auckland electricity and gas network owner Vector has lost its final appeal against the way the Commerce Commission set starting prices for the new regime regulating prices for its monopoly services.

But Vector will live to fight another day on more substantive issues being argued in a High Court merits review which has been running in parallel to the legal arguments over how the commission has applied its regulatory powers.

The commission welcomed the unanimous Supreme Court decision confirming it is not required to determine a methodology for the various inputs it uses to determine the starting prices for regulated prices of monopoly electricity and gas networks.

However, the court rejected the commission’s earlier arguments that it could not have done so. Instead, it confirms the commission may choose to do so if it wishes, giving Vector a minor win in a long fought action that it has otherwise lost.

“It’s a bit disappointing,” Vector chief executive Simon Mackenzie told BusinessDesk. “We move on now to saying the starting price adjustment is part of the merits appeal process.”

Hearings on the merits appeal, which involves other monopoly network providers including ports, airports and national grid operator Transpower, have been ongoing in recent weeks in the Wellington High Court, with decisions likely early next year.

“The materiality of the merits decision is the more substantive” for Vector, said Mackenzie. “If you see big adjustments (to starting prices), there must be big changes to the inputs that we need to understand.”.

Commission chair Mark Berry said the Supreme Court ruling “finally allows the commission to complete aspects of the regulatory regime which will promote the certainty that the legislation anticipated” for both electricity distribution and gas pipeline businesses.

The final report on the reset of electricity default price-quality paths is scheduled for Nov. 30, with a final decision on the default price-quality path for gas pipeline businesses is scheduled for release in February.

Mackenzie said the appeals were an important part of bedding in a new process, but Berry said the delays caused by Vector’s actions “had the effect of allowing some businesses to continue to charge their customers too much”, while “some businesses which we believe should be able to charge more in order to invest in their networks have not been able to increase prices.”